SATAVAHANA ISPAT LIMITED Versus CCT, TIRUPATI GST
Central Excise
2019 (3) TMI 100 – CESTAT HYDERABAD – TMI
CESTAT HYDERABAD – AT
Dated:- 13-2-2019
APPEAL No. E/30725/2018 – A/30206/2019
Central Excise
Mr. P. VENKATA SUBBA RAO, MEMBER (TECHNICAL)
Ms. S. Vishnu Priya, Advocate for the Appellant.
Shri N. Bhanu Kiran, Asst. Commissioner /AR for the Respondent.
ORDER
Per: Mr. P.V. Subba Rao
1. This appeal is filed against Order-in-Appeal No. TTD-EXCUS-000- APP-175-17-18, dated 28.03.2018. The facts of the case in brief are that the appellant is engaged in the manufacture of pig iron from iron ore and avail CENVAT Credit under CCR 2004. The process of manufacture of pig iron involves breaking lumps of iron ore into smaller parts and feeding them into the blast furnace for manufacture of pig iron. In this process, very small fine particles of the ore fall out which are known as Iron Ore Fines. The appellant was served a notice stating that in the process of manuf
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ith Rule 15(2) of CCR 2004. Aggrieved, the appellant appealed to the first appellate authority who upheld the Order-in-Original in toto and rejected the appeal. Hence this appeal.
3. Ld. Counsel for the appellant submits that the two tests which must be passed before a product gets charged to central excise duty are (a) manufacture and (b) marketability. As far as the products in question are concerned, there is no doubt that iron ore fines which emerge during the process of manufacture in their factory are marketable and are indeed sold. The second test is the process of manufacture. They have no intention to manufacture iron ore fines and they are not undertaking any process to manufacture fines. The fines only emerge as a by product during the process of manufacture of their final product namely sponge iron. Therefore, they cannot be held to have manufactured iron ore fine even though iron ore fines are specifically listed as an excisable product under Central Excise tariff. She ar
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ule 6(3) of CCR 2004 with respect to the iron ore fine sold by such manufacture. She asserts that their case is identical. She also contests the demand on the question of limitation and draws the attention of the Bench to the para No. 13 of the show cause notice which shows that the only basis for issuing the show cause notice is their own letter to the department dated 17.04.2015. Thus, they themselves have disclosed their activity which forms the basis of the demand and that they cannot be alleged to have suppressed or misstated any facts to invoke the extended period of limitation. On the same ground, they are also not liable to any penalty. She therefore prays that the appeal may be allowed and the impugned order may be set aside.
4. Ld. DR reiterates the findings of the lower authority and the first appellate authority. He submits that notification No. 6/2015-CE (NT), was issued on 01.03.2015, para 4 of which inserted an explanation to Rule 6(1) of the CCR 2004 as follows:
“Expl
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iron. The iron ore fines have also been specifically mentioned in the Central Excise Tariff and therefore should be considered s excisable goods. But for the exemption notification, they would have been liable to pay excise duty. Because of the exemption notification, they were exempted and therefore the appellant is liable to reverse the proportionate amount of CENVAT Credit or pay the amount under Rule 6(3) of CCR 2004 for using common input and input services. He therefore prayed that the appeal may be rejected.
6. I have considered the arguments on both sides and perused the records. The issue to be decided in brief is whether the iron ore fines are to be treated as excisable goods manufactured by the appellant which are exempted by virtue of exemption notification and correspondingly whether an amount needs to be reversed under Rule 6(3) of CCR 2004. It is the case of the appellant that they are not manufacturing iron ore fines which only emerged during the process of manufacture
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